The escalation of geopolitical tension at the beginning of the week has put pressure on the European and US stock markets, which are now looking more vehemently at the first support levels they face, but also at the buy zones in which the return/risk equation for taking positions in the market would be more attractive.
In the case of the Ibex 35, operationally the levels that since ecotrader have been set as optimal for buying the Spanish stock market again, they are in the September lows, at 11,138 pointsand the support level to which consolidation could take the index in the worst case scenario is that of 10,900/11,000 pointswhich is where it runs the bullish guideline that has been guiding the increases from the 2022 lows.
For its part, in the EuroStoxx 50 the support environment for 4,675/4,700 points It is the one to watch and the biggest risk is that it ends up looking for the August lows around the 4,420/4,480 points.
In this context of approaching the first support levels that the European stock markets face, the market invites us to monitor the behavior of some indices that may give clues about the path that the benchmark indexes in Europe may take, such as the already mentioned EuroStoxx and Ibex.
Eyes in recent hours have focused on the EuroStoxx 50, but in its Total Return version, the one that takes into account the distribution of dividends, which has recently lost the bullish trend that arose from combining the minimums of 2022, 2023 and August 2024. “This movement has opened the door for the main European reference to seek support at the August lows at 10,900, which are still 3.6% away,” explains Joan Cabrero. , technical analyst and strategist at Ecotrader who It is doubtful that a reliable upward turn can be seen in continental stock markets. without first that key support and red line be put to the test.
You also have to monitor the behavior of the Dax 40 as one of the selective ones that can give clues to the market about where investors can move in the coming weeks. The German index threatens to confirm a bearish pattern in the form of head and shoulders which would open the door to an additional 4% drop. This pattern would be confirmed if it loses the 18,900 points that, for the moment, are resisting the bearish advance, but which were already tested in Tuesday’s session.
In search of the ‘Christmas Rally’
The tension in the markets became evident yesterday with declines that exceeded 2.1% during some moments of the day in indices such as the Ibex 35 and the EuroStoxx 50, although at closing, the falls were finally less than 1%.
However, this movement and the consequent approach to support has served to highlight in recent days the opportunity to buy again the European stock market that is presented to the investor, who – if these declines materialize – would face “a profitability equation /risk much more attractive than weeks ago,” explains Cabrero. “In fact,” says the expert, “if we have that fall that is emerging in the stock markets, it is likely that we will have a Christmas Rally easier to take advantage of than if there were no such drop.
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